Moving from sickness to wellness

In any economy, the healthcare market has a few key players, namely, government and private hospitals, medical equipment and supplies, pharmaceuticals, diagnostics, medical insurance, and upcoming technologies. Healthcare market in India is expected to reach USD 322 billion by the year 2022. It has been the fourth largest employment provider in 2017. Out of various components, hospital industry makes the largest part of the healthcare market, and it is expected to reach USD 133 billion by the year 2023. Difference between investment done by private and public sector makes Indian market different from the global market. In comparison to developed and developing nations across the globe, the share of private sector among total healthcare expenditure is the highest, i.e., 74 percent. Private sector’s contribution in China is 44 percent and in USA it is 52 percent. Over the years, private sector has emerged as a key force in improving international reputation of India. Presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism. We saw the growth of medical tourism by 50 percent from 2017 to 2018. Yoga, Ayurveda, and naturopathy are among other services leading to growth of medical tourism.

Over the years, we are seeing gradual shift in public awareness from communicable to non-communicable diseases. Lastly, it is believed non-communicable diseases like cancer, diabetes, and obesity are expected to comprise more than 75 percent of India’s disease burden by 2025.

On budgetary allocation in healthcare
Budgetary allocation of 2018-19 has seen rise of 13 percent over the previous year allocation. Though the rise is in absolute terms, the spend is still 1.3 percent of GDP, much lower than the global average of 6 percent. Over the years, as announced by the government, the spend needs to increase.

With only 34 percent penetration of health insurance (NHP 2018) and private insurance making about one-fourth of the pie, healthcare spends have been majorly out-of-pocket costs, i.e., about 67 percent (WHO Health Financing Profile 2017). This has led to ignorance among people in combating non-communicable diseases like diabetes and other cardiovascular ailments. Implementation of Ayushman Bharath, world’s largest national health insurance program, which will provide annual health cover of `5 lakh per family to over 10 crore poor families, will help in bringing down the out-of-pocket costs hugely. Most importantly, the focus will be on secondary and tertiary care. If properly implemented, the program would not only bring down costs but also improve productivity of people, ultimately increasing GDP of the nation.

On public private partnership
Rising income level, growing health awareness, increased incidence of lifestyle diseases, improved access to medical insurance, mismatch between demand for and supply of healthcare services and infrastructure, and shift to non-communicable diseases are pointing toward massive investment opportunities for the private sector.

However, these opportunities come with complex set of challenges. Limited availability of skilled workforce, high land and infrastructure costs, and ever-changing medical technology are a few factors increasing the cost of running a healthcare enterprise. Though social and demographic factors are favoring healthcare investment, return on investment is low compared to other business ventures. Hence, FDI-encouraging policies, tax benefits, favorable government policies, and equal participation by government will play a major role in bringing private investments in the healthcare segment. In a country like India with huge population, PPP is most important in making healthcare a success, as it increases trust and confidence among private investors. Investment largely dominated by private sector will lead to development of healthcare facilities